UAE regulated crypto exchange expands to 11 states in the USA

UAE regulated crypto exchange expands to 11 states in the USA

In a recent statement on the X platform ( formerly Twitter), The CEO of BackPack, UAE regulated crypto exchange, announced that the crypto exchange had expanded to reach 11 US states, including California, Colorado, Indiana, Missouri, Wyoming and others.

CEO Armani Ferrante outlined plans to consolidate the exchange’s presence in the US, saying, “Today, we beginning our journey to bring Backpack Exchange into the USA. It’ll be slow. It’ll be steady. It’ll be hard. But it’ll be worth it. If we don’t support your state yet, hold on. We’ll get there. This is something that will take years to complete. But we’re committed to doing it right.”

The exchange, currently in its beta phase, facilitates spot trading activities and intends to diversify into derivatives, margin trading, and more as it secures additional licenses globally.

Backpack was co-founded by Can Sun, former general counsel at FTX, and Ferrante, previously and a software developer at Alameda Research.

The Backpack Exchange platform boasts multiple licenses across global jurisdictions, including the United Arab Emirates (UAE), Lithuania, Australia, and the United States.

In October 2023, BackPack Web3 non-custodial XNFT wallet and exchange received a full license by Dubai Virtual asset regulatory authority allowing it to run a regulated crypto exchange in UAE. Backpack, which was considered one of top 30 best crypto wallets in 2023, was developed by Coral. It offers XNFTs built on Solana Blockchain.

Backpack Exchange is set to launch in private beta for its community members in November before going live to the public in Q1 2024.

UAE based Trek Labs Ltd FZE, will launch under the name Backpack Exchange. This license only covers Backpack Exchange and not any of the other virtual asset products and services offered by Backpack.

VARA to license 15 entities by end of 2023, and launch DeFi regulations, Gamefi, and crypto derivatives

VARA to license 15 entities by end of 2023, and launch DeFi regulations, Gamefi, and crypto derivatives

In a recent LinkedIn post, Soham Panchamiya, Associate for tech companies and regulatory disputes at Reed Smith, one of the leading global law firms with more than 1,500 lawyers in 30 offices throughout the United States, Europe, the Middle East and Asia, announced that they are expecting Dubai Virtual Asset Regulatory Authority (VARA) will fully license 15 entities before the end of 2023.

According to Panchamiya, “New developments continue to come forward in the UAE VARA in Dubai is making great strides to earn its stripes as the premier regulator for crypto and Web3 companies in the world.”

He also expects major announcements and change for game-fi, DeFi and crypto derivatives.

So far Dubai VARA has already fully licensed four crypto exchange, brokerage, and custodial firms. Most recently is BackPack exchange, TOKO, received full crypto exchange licenses, while Komainu received full crypto custodial and custody staking services. VARA was one of the first regulators globally to issue crypto staking regulations.  The fifth license was given to Laser Digital for crypto broker and investment services.

On VARA’s register listing are 11 entities that have either received a full license or at the MVP preparatory or operational phase. These include names such as Bybit crypto exchange, Binance, OKX, crypto.com, GCX exchange, as well as Hextrust crypto custodian. Meanwhile, BitOasis license is still inactive, after it had received MVP operational license.

There are others who have received preliminary approval not listed on VARA website.

Given the current numbers, VARA will be licensing 11 more entities before the end of the year.

In August 2023, the Dubai Department of Economy and Tourism and Dubai VARA signed an MOU to unify VASP (virtual asset service provider) offering in the city. The two entities are collaborating to offer a synchronized VA market assurance across the Emirate of Dubai –spanning Customer Care + Complaints; [Business] On-Site Inspection + Enforcement; [Business] VASP Registration + Licensing; [G2G + G2B + G2C] Education-Training-Knowledge Sharing.

During DACOM (The Digital Asset Compliance and Market Integrity Summit) hosted by Solidus Labs, a crypto-native market surveillance and risk monitoring hub tailored for digital assets, in Abu Dhabi in May  2023, Henson Orser CEO of VARA stated, that the future will include tokenization of real world assets, including real estate, as well as micro financing, royalty rights for creators and publishers, with smart contracts for movies /music, permissioned DeFi (Decentralized Finance), gaming and the metaverse. Here he sees, “A billion users will start to challenge the boundaries of title and value” and finally interoperability, transfers identity and more.

Furthermore in an exclusive LaraontheBlock interview with Henson Orser, discussing VARA stated that while the term DeFi is not specifically referenced in the 7 Rulebooks from VARA, DeFi lies very much at the core of Dubai’s Future Economy considerations. Orser explained that VARA’s Rulebooks have focused on facilitating borderless ‘value-exchange’ both in the traditional and new economy contexts, by leveraging a full spectrum of cross-cutting ‘activities’, which should not in any way be construed as TradFi specific.

He stated, “We are well aware that in this sector new technologies and products will be continually emerging, and constructively challenging traditional financial systems. It is exactly for this reason that VARA has been constructed as a technology agnostic and product-neutral framework that allows us to remain progressive and future-focused.  This means that our regime will provide for R&D sandboxes to test, learn and evolve prototypes across DeFis and DAOs today, to wider innovations across Metaverse and Web3.0. As we have maintained, the VARA Regulations will strike a measured balance between remaining agile so we benefit from future waves of technological innovations, yet being definitive in their ability to provide the required market certainty, FATF assurances, and cross-border security which are non-comprisable to us.”

In September 2023, VARA updated its virtual asset rulebook and added new regulations with regards to what it calls Fiat referenced virtual asset ( FRVA) better known to most as virtual assets pegged to a stable value, or stablecoins.

Prior to that VARA opened the door to regulate crypto staking services with its revised Custody Services Rulebook, allowing staking by virtual asset custody Service providers. As per the revised rule book, virtual asset service providers who carry out custody services can offer staking services as well without obtaining a separate license for VA Management and Investment Services. Additional licensing and supervision fees will be payable in connection with the provision of this additional service.

As per Panchamiya in his post, he states, “Not a bad start. It remains to be seen how viable the industry sector is going to be moving forward as the continuance of the bear market dampens spirits worldwide, but with the spot ETF movements in the US, the recent wins in courts and the continued regulatory developments, it seems that market players and UAE regulators are bullish.”

BackPack XNFT wallet receives regulated crypto exchange license in UAE

BackPack XNFT wallet receives regulated crypto exchange license in UAE

BackPack Web3 non custodial XNFT wallet has received a full license by Dubai Virtual asset regulatory authority allowing it to run a regulated crypto exchange in UAE. BackPack,which was considered one of top 30 best crypto wallets in 2023 was developed by Coral. It offers XNFTs built on Solana Blockchain.

Backpack Exchange is set to launch in private beta for its community members in November before going live to the public in Q1 2024. UAE based Trek Labs Ltd FZE, will launch under the name Backpack Exchange. This license only covers Backpack Exchange and not any of the other virtual asset products and services offered by Backpack.

xNFTs are a different type of non-fungible token, that combine use cases of NFTs and applications in one asset. xNFT stands for executable non-fungible token, meaning it is a unique digital item that can run code inside it.

The XNFT is new, programmable non-fungible token (NFT) standard that act as Web3 applications, built on Solana by the developers at Coral which is part of The WAO Company. xNFTs allowing users to interact with their NFTs and use them for more than just collectibles on the blockchain. Their unique feature is to enable applications to run natively inside the NFT. For example, an xNFT lets users play a game, listen to music, or access a DeFi protocol, all within one open, programmable system built for Web3. You can also have a xNFT that updates itself based on external data or events.

The combination of Backpack Exchange and Backpack Wallet (which is currently an unregulated product) is designed to provide the smoothest transition for users from fiat to on-chain applications. While Backpack Wallet users already have access to a variety of dApps and executable NFTs (xNFTs) unique to Backpack, they will now be able to conduct trades on the exchange directly in the app.

Coral is also the company behind Mad Lads which is the Number 1 NFT collection on Solana. Backpack’s CEO and founder, Armani Ferrante, managed to navigate the challenges posed by the collapse of FTX, after which Coral lost approximately $14.5 million of FTX’s investment in a $20 million funding round backed by FTX Ventures.

Over the past five months, Backpack Exchange has developed a next-generation exchange that incorporates a novel zero-knowledge proof of reserves (zk-proofs), Multi-Party Computation (MPC) for custody, and low latency order execution, while also securing licenses in several jurisdictions worldwide and establishing premium fiat on and off ramps for users.

A VARA Spokesperson noted, “Dubai’s VA sector is fully regulated and VARA’s founding principles have been anchored on the need to structure guardrails for market security while remaining progressive and responsive to innovation. To this end, the licensing process is rigorous in its evaluation of suitably qualified ‘responsible’ participants that can serve as the UAE’s bar for convergence across global jurisdictions. In keeping with Dubai’s repute as a preferred global hub for entrepreneurship, Backpack Exchange must be recognized for their commitment to prioritize investor protection and risk assurance, and VARA appreciates their readiness to fulfill necessary prerequisites that has made them among the first VA exchanges to secure a full market license within the VARA regime”.

Armani Ferrante, CEO and Founder of Backpack, stated: “It’s time to put an end to the days of opaque crypto exchanges representing everything our industry stands against. It shouldn’t be normal to use an exchange with a single point of failure, without proof of reserves, or without auditability. A verifiable, unforgeable ledger is the exact problem blockchains solve, and Backpack Exchange is taking full advantage of that. Using cryptographic techniques like zk-proofs, MPC, and state machine replication, Backpack Exchange hopes to raise the bar for transparency and compliance to demonstrate the best this technology has to offer. Don’t trust, verify.”

Backpack Exchange will launch in private beta for existing Backpack and MadLads community members this November. The beta will feature spot crypto trading functionality. The exchange is set to go live to the public in Q1 of 2024. The Backpack Exchange team will be working to add in various trading functionalities such as derivatives, margin, cross-collateral while its compliance team, with decades of experience from Barclays, State Street, HSBC, Coinbase, and other prominent financial institutions continues to secure additional licenses around the world.